The New Yorker

Home Economics

As many as 15 million homeowners now owe more on their mortgages than their homes are worth. Homeownership isn't building wealth for these people, James Surowiecki editorializes.

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Keep this in mind …

• Interest rates on home equity lines of credit are far below the rates of most credit cards, so homeowners who are able to tap those lines for emergencies accumulate less debt than renters forced to charge expenses at higher rates. A $30,000 home equity loan is running at about 5.75 percent this week, according to Bankrate.com.
  
  
• Overall, the median net worth of a lower-income homeowner is more than 13 times that of a renter with comparable income, according to Harvard University’s Joint Center for Housing Studies.
  
  
• Ownership is forced saving. Typically, payments in the first few years of a mortgage are applied to interest. As time passes, however, more and more of each payment is applied to the outstanding loan amount, accumulating equity that can be recaptured, if needed, through an equity line of credit or when the house sells.

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